(MENAFN- ValueWalk)
2081671 / Pixabay
The child tax credit proved to be a lifeline for millions of families, but it ended in December of last year. Some families, however, could be due for one more child stimulus check. This child stimulus check, called the child and dependent care credit, offers eligible families up to $8,000 credit in their taxes.
Child And Dependent Care Credit: What Is It?
Similar to the expanded child tax credit, the child and dependent care credit was also part of President Joe Biden's American Rescue Plan. Under the child and dependent care credit, parents are allowed to claim up to 50% of their childcare expenses for 2021, with a maximum limit of $8,000.
Get The Full Henry Singleton Series in PDF
Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues
Q1 2022 hedge fund letters, conferences and more
This Is What Hedge Funds Will Need To Do To Succeed In The Long Term
Last year was a banner year for hedge funds in general, as the industry attracted $31 billion worth of net inflows, according to data from HFM. That total included a challenging fourth quarter, in which investors pulled more than $23 billion from hedge funds. HFM reported $12 billion in inflows for the first quarter following Read More
It must be noted that the child and dependent care credit is not a new credit, rather the American Rescue Plan raised its limit. Before the American Rescue Plan , parents were allowed to claim 35% in credit, up to a maximum of $3,000 for childcare expenses for one child and up to $6,000 for two children.
'The child and dependent care tax credit is a credit allowed for a percentage of work-related expenses that a taxpayer incurs for the care of qualifying persons to enable the taxpayer to work or look for work,' the IRS says.
Claiming this credit is easy. You need to claim this credit while filing your taxes by including it on your 2021 tax return.
Child Stimulus Check (Credit): Who Can Claim It?
Unlike the child tax credit, this credit can only be claimed by taxpayers, who in order to work or look for work, paid someone to look after their child or dependents in 2021. The child or dependents in this case would be a child below 13 years, a spouse incapable of self-care, or a qualifying dependent incapable of self-care.
Moreover, it is also important that the dependent for which you are claiming the credit, must be your legal dependent when the care was provided. Also, in case you share the custody of a child with another person then only the custodial parent will be allowed to claim the credit.
If you are claiming the credit for an adult dependent or spouse, then there are a few more requirements that you need to meet. To know about these requirements, as well as other details of the child and dependent care credit, visit this link .
A point to note is that the child and dependent care credit is a nonrefundable credit. So, this child stimulus check can be claimed only by taxpayers with taxable income. Thus, parents or guardians who are nonfilers, or who aren't required to file or pay taxes because of lower income, are not eligible to claim this credit.
Also, taxpayers with AGI (adjusted gross income) more than $438,000 are not eligible for this even if they claimed this credit previously. This credit can be claimed by U.S. citizens. Also, taxpayers that the IRS considers residents and non-residents can claim this credit as well.
Updated on May 18, 2022, 9:47 am
MENAFN18052022005205011743ID1104236930
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.